The end of the Great Keynesian Experiment is upon us. Prepare accordingly.

Wednesday, December 22, 2010

Move Along, Please. Nothing To See Here.

At least that's what The Fed and their sycophant mouthpieces in the media would have you believe. Please take a moment to ensure we are on the same page as this is critical to understand. If "official" US government statistics were to "officially" show the true rate of inflation, there is no possible way the debt and deficit could be financed at 3%. No Way! Inflation must be under-reported or the entire scheme collapses from it's own weight. The stated inflation rate is the single most important statistic in prolonging the status quo. Rates must be kept low, at all cost.

So, as I sit here this morning in my t-shirt and jeans, I started thinking about this:

I took a bite of banana bread and, as I chewed, I began to ponder this:

I washed that bread down with a sip of coffee and it led me to this:

Not good. The US government can lie and manipulate all it wants but these facts are what they are. Facts. You feel the underlying inflation just as I do. Even if end producers aren't currently passing along all of these costs to consumers, they will have to eventually. Rates will be forced higher, regardless of how many bonds the Fed purchases through QE2, QE3 and so on. In fact, further QE only exacerbates the rise of input costs and makes this whole process worsen and speed up.

My point is, protect yourself. DO NOT, under any circumstances, allow Blythe and her monkeys to scare you out of your precious metals. By the way, take another look at the percentage gains of these three commodities. Ingrain them into your memory and pull them back out the next time you hear some stooge/buffoon state that "gold and silver are in a bubble".

On to today, its 9:10 and everyone is waiting for Blythe to start her daily ritual. Maybe today she won't. Perhaps seeing crude at $90.30 is giving her pause. If she doesn't strike, we're headed back to and through 1400 in gold and we'll probably move up near 29.75 in silver. Let's watch and see.

Lastly, The Turd would like to applaud his friends Luke and Elizabeth Skywalker as they celebrate their 21st wedding anniversary. I don't remember much of that day...too much Jack Daniels...but it was cold as hell, something like -25F. Brutal cold but they've made it 21 years, nonetheless, and for that they are to be congratulated.

Also, I have been using this website to save my silver for last 3-4 months and these guys seem pretty straightforward. They are about to roll out the same feature in gold as well as instant swap of gold into silver and vice versa. The only con I have seen so far is that they are a little pricey with their fees.

dd, They give you options for coins and bars. Let me ask you though, I thought that coins are more liquid in case you wanna sell them? Or am I wrong on this one? Say, I have a 1000 oz silver bar, how easy/hard would it be to get rid of it in case I wanted to do so?

and have picked up a few deals on ebay and www.lynncoins.com from time to time.

As for the "official" inflation number coming from the "ministry of truth" (h.t. to Wells' 1984) - my observations confirm the Turd's charts above. I note that the dress shirts I used to get from Lands End and JC Penny (Stafford brand) use much lighter, nearly see-through cloth now to keep the price points down in an attempt to offset cotton. My personal "beer index" of inflation is way up. Last year at my local mega-mart, Sierra Nevada used to run about $7.49/six pack, and is now about $8.49. Rogue Ale was around $9.99 and now is $11.99. Gas is currently running around $3.15/gallon, up from $2.89 in late spring. I know, I know, the food and energy are "volatile" according to the gubmint, so they conviniently exclude them from the CPI. Down here on earth, beer and gas have gone up.

Another trend I've noticed is the nubmer of businesses asking for cash over credit card to complete transactions. An indicator of margin pressure if you ask me, and/or a regulatory/tax avoidance move. Either way, the inflationary pressure is mounting.

First time posting, but have been lurking since Turd started this blog - keep up the good work!

nope, there's no inflation, not one bit...last month a lb of tomatoes was $1.69, then $1.99 yesterday...$2.99...I'm stashing rice, beans and spam...can't stand spam, but when you're hungry it will taste like filet mignon...not to mention ammo, water and silver...

timpa: Tomatoes are very seasonal. Well, at least in my area they are. Thus the fluctuations in price. What needs to be watched is stuff like sugar, flour, meat, eggs, OJ, coffee, cocoa, etc. In other words, simple basic staples from which a majority of foods and meals are made.

d - you might consider buying "junk silver" - old dimes and quarters as your "fractional rounds". I think APMEX has smaller lots of these or ebay is always good for small lots at a decent price. IMO, they'll be a very useful trading piece if needed in the future.

IMO "junk silver" is fine for some things...but it is much easier to place true value on a one ounce silver round than a coin with 90%...as silver moves in price how will one other than yourself understand a junk silver coins value...with bullion there will be no question as to the value...

Not bashing you timpa -- you're spot on about rising food prices -- but Selfish Man is correct on the tomatoes. The recent cold weather in Florida, from where almost every tomato served at fast food restaurants in America come, have caused rapid price rises. I know several people that own restaurants who are asking patrons to not request tomatoes on sandwiches because of costs.

On a related note, my family's farm sold off the remaining 300 head of dairy cattle several years ago and we've been riding the wheat train since. 2007-2008 was phenomenal. This year hasn't been too shabby either.

I'd recommend stocking up on flour while you can. Several "preparedness" vendors offer 40lb buckets near the $60 price point with a 20 year shelf life if unopened.

The faster you get your deep pantry set up, the better off you'll be.

For cotton goods, if you need something now like a new dress shirt, buy two and buy classic styles from a quality manufacturer.

d: Your probably not going to find any 1/2 ounce silver rounds that don't have a large premium. The premium for a full ounce is already pretty low(usually $1-$1.50). So a half ounce is going to be much more expensive percentage wise. Just go for the full ounce in my opinion. Unless you are buying gold then you might find it worth while. But if you can't afford a full ounce of gold, I recommend again that you buy silver and reap the benefits.

Selfish Man: I recommend that you have at least some of your silver in rounds and the rest in bars. Rounds are great for exchange and, bars are better for larger purchases and storage of wealth. For example I accumulated about 70 one troy ounce rounds before I started buying the ten ounce silver bars. Just so I have them if I need em. And the premiums really aren't that bad.

Find a local coin shop, great place to shoot the shit and get advice. I also have an account with www.goldmoney.com, and www.gainesvillecoins.com. I highly recommend them both.

Gainesville coins was the NIA(national inflation association)2010 pick for best overall online bullion store. As far as shipping, premiums, and customer service are concerned. Great people, I have personally done business with them.

Hi Tripp: it's not just tomatoes...all veggies are up, from soybeans to soy milk etc...flour is OK, but a pain to have to bake something with limited fuel supply...my wife said a big "NO" to flour...as for clothing...I buy my stuff at Goodwill/second hand stores...yes I have the money to pay retail, but why...not only that, hopefully you are supporting a good cause...all my money is in physical...sold a house 10 years ago, lived on the interest for years and no debt, still have every dime...now I can't get rid of this paper fast enough...

Chris: Good stuff, I ll check them out. What does every one think of generic silver? APMEX has this item where you purchase ounces of generic fine silver and they fill it with whatever is available at the time. I bought 5 oz to try and got 5.2 oz for price of 5 oz. There were a few casino half ounce coins, plus some commemorative coins from Oklahoma and Michigan as well as a tiny 8 gram Republic of Texas coin (apparently, Texas can still coin its own money). This is sold at much lower premium when compared to other coins/bars.

The Witch has lots of high powered help... anyone else see the gold smear campaign on Bloomberg... they're running a 'series' called "The Dark Side of Gold!"

According to them, the "bubble" in gold has put the brakes on gold jewlery sales... workers are being abused to get the evil metal out of the ground... child labor issues abound... environmental problems everywhere... and rumor has it the miners are holding the Tooth Fairy, Santa, and the Easter Bunny hostage until gold hits $2K.

countermeasure: Some one once said that you should not try catching a falling safe at 10th floor. let it drop, crack open and then collect the goodies that fall out of it. The safe in this case is the housing market. It is still dropping like stone and will continue to do so. Now, it may start growing in nominal terms (hello Mr. Ben Bernank and QE2 and the worth less and less fiat dollars), but in real terms (PM, commodities) it will be falling. The real estate will not be a good buy for another 15-20 years. You will do much better holding PM's and minining stocks.

Also, dont forget that any rental property involves TAXES ,and given the dire state of municipalities and states in this country, those taxes have nowhere else to go but up. That "cash flow positive" may quickly become a "break even" property or even a "negative cash flow" property and thats even before you account for falling real terms value. Now, that said, the are always exceptions and each area is different when it comes to demographics/real estate. However, I believe the general situation in the country will be the one described above.

you can lose as a landlord if there comes a shortage of qualified renters willing to pay your price. here's the deal in commercial real estate - you have two buildings worth 1 million apiece. one gets foreclosed and resold for 1/2 price 500,000. they start charging 1/2 the rent that the building next door is charging. pretty soon, the halfprice building is full, and the full price building loses all its renters. then the full price building goes into foreclosure. in short, the real estate bubble is STILL bursting.

For those looking to buy Physical PM's don't forget your local coin shows. You'll have a good 25-50 dealers competing in one room and it's cash and carry. It's fairly easy to find 90% silver coins for under spot and other silver/gold coins and bars at or near spot at the local shows. Check Apmex or your favorite dealer and take some notes before you go to give yourself a reference point for negotiations. Many of the dealers will have a small amount of bullion as a loss leader to get people at their space. Check your local coin clubs site, they usually will have a calendar with the local shows listed...

Don't stock up on flour; it doesn't keep for long. Stock up on wheat. Seal it in a mylar bag with an oxygen absorber and stick that whole thing in a food grade bucket. Invest in a good grain mill. I like the Family Grain Mill. You can get it with an attachment to hook up to a KitchenAid or Bosch mixer or you can get a hand crank or you can get both.

A cup of wheat grinds out to about 1 1/4 cups of flour. Find a good recipe for whole wheat bread. You can blend it with a nice bread flour for a light roll or loaf. My little ones love fresh wheat rolls. I literally have to hold them back when I open the oven.

Stock up, stock up, stock up. Properly packaged staples will keep for years and years and years...

weighing in *cough* on the food/staples subject - others have mentioned new packaging with less volume, this has been ongoing since 2008 (yes, & forever), but something else I've noticed is ingredient substitutions/filler - fave example is buying pre-made pesto & finding "parsley" as a substitute for basil - parsley is not an ingredient in basic pesto, but it "is" green! I suppose they figured no one would notice the excess bitterness. . .

advice with food quality - the "mechanically reclaimed meat" ingredient-filler - this used to be a classification for pet foods, but has gradually migrated to human foods (don't even ask what filth goes into the "by-products" of pet foods now) - pretty much all fast food uses this nasty filler, and it's migrating to supermarket foodstuffs. . . the other thing to be careful of is GMO-products, which by law do not have to be labeled (ie hidden), and are ubiquitous in the amrkn supermarket food supply. . . food allergies are increasing, as are diseases & cancers of the stomach/intestine, etc.

so far, Monsanto has been kept from infecting the wheat market with GMO seed, but no doubt they will continue their campaign to own the global food supply, and corrupt it. . . for now, consider organic sources if you can - if you're looking to "survive" and investing in precious metals, might as well stay as healthy as possible!

90% silver coins are easy to value, anyone with a scale can weigh them to the troy oz & then subtract 10%. The face value is irrelevant. If push comes to shove, every shopkeeper/trader will have a scale, just like the old days. I think they smaller coins will be handy and since they are US minted people will trust them as money.

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About Me

"Turd Ferguson" has been involved in the securites "industry" for over 20 years. He first received his NASD licenses in June of 1990. Ultimately disgruntled by the fraud known as "financial planning", he retired to a career as a serial entrepreneur in 2008. The Turd is NOT a soothsayer, a psychic or a witch. After all these years, he simply has a decent handle on the PM "markets". You can reach The Turd by email at tfmetalsreport@gmail.com. If you are polite and not an AGA, he will probably answer you in short order.

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All content at this website http://tfmetalsreport.blogspot.com is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice (because it is, most assuredly, not), nor is it at all intended to be taken as such.

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Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. DO NOT EVER purchase any security or investment without doing your own and sufficient research. The Turd is not under any obligation to update or keep current the information contained herein but he probably will anyway. Turd may, at times and probably does, have positions in the securities or investments referred to here and may make purchases or sales of these securities and investments while this site is live. However, if asked, he'll gladly tell you what those investments are so don't worry about it. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed. Seriously.